How can business survive climate change? | The Economist
climate change is about to upend the corporate world like never before massive devastation it was a firestorm heavy regulation the world's worst emitting companies even the worst medium emitting companies are on borrowed time and lots more litigation pg e's billion dollar payout on volkswagen pleading guilty in detroit for cheating on emissions rules covert 19 has highlighted the perils of failing to prepare the businesses refuse to change we will go the way of the dinosaur there's ash that is falling staving off the catastrophe of climate change requires a rewiring of the entire global economy this spells huge opportunities for some the economic opportunity of this green revolution is not less than original natural revolution but can the corporate world react and adapt in time climate change is like cancer the longer you wait the worse your chances are [Music] we're driving through downtown saint helena and you can see the smoke and people's headlights the smoke is so thick it's like a dense fog lisa mckelly is a scientist who advises businesses on the impact of wildfires caused by climate change within the past few weeks four out of california's five biggest recorded wildfires have smothered this famous wine growing region with ash and smoke the fire stops here today lisa is advising dan petrovsky winemaker at larkmead vineyards on how to reduce its exposure to risks down there just three days ago fire burned right up to the edge of these vineyards that's what i call a hazard pulley so what was it like when you first headed towards larkman there were five fire trucks on the other side of this uh the river here it was the heaviest smoke i've been part of stinging my eyes also that that night of the power line went down and hit my car and that's when i put out a fire over by the winery and that's then i burned my boots let's see those boots these are so the rubber on the bottom of my uh soles and my boots were this was actually a fire at larkmead uh on the property how high do you think the flames got here they were absolutely flamed straight up um there was one that looked like it was just like super ominous it was by itself and it was just like a lonely tree with just a straight fire line well this is a great example two of us a place that is burned but if another fire was to start there's plenty left that could burn again for lark mead this fire was a narrow escape but in a state that produces 86 of america's wine many other businesses have not been so lucky 8 000 structures have been lost and nearly 30 percent of the county of napa has been consumed in the 2020 fire season we are dealing with constant power shutoffs during the fire weather to try to avoid fires from starting so this of course is hitting a community that's had two years of fires and then the covid crisis and so our local businesses are struggling to stay alive temperatures in excess of 35 celsius spoil grapes and force vineyards to shut down just over a century ago napa county hit these temperatures on average six days a year now that figure is 33 days the average temperature of the planet has already risen by almost one degree celsius since 1970. climate models suggest that if this reaches 2 degrees the world's existing wine growing region will shrink by 56 although i was exposed to the concept of climate change early in my career i never thought that the impacts we were projecting would come to pass in my lifetime our computer model said oh well maybe it'll happen at the end of the century you know 2050 2060 but we're here in 2020 and we're seeing some of the worst case scenarios come to pass the physical risks to businesses from climate change stretch far beyond the industry of winemaking 25th named storm of the season it is the earliest j-named storm in history across the planet businesses of all kinds are facing growing disruption from more extreme floods and storms research suggests that climate change could cost 215 big global firms a collective one trillion dollars much of this over the next five years rich salkin is the co-founder of a leading data analytics company which advises firms on how to mitigate these risks the business community is facing more risk from the weather driven by climate change than ever before the statistics on this are crystal clear the financial loss from weather-related events is at record levels and the impact has been devastating to protect societies and their businesses from the worst effects of climate change more funds are needed for adaptive measures from floating farms and storm resilience seeds to pop-up sea walls according to one estimate around 180 billion dollars of investment is required each year over the next decade if you look 10 years forward there won't be a single large entity on the planet commercial or government that doesn't have a well-thought-out approach to assessing and addressing physical risks from climate change it looks a bit like cyber security did 10 years ago where businesses by and large were just starting to realize there was an issue but didn't know what to do about it didn't have the tools to address it now every major entity on the planet has a well thought out cyber security program while they struggle to adapt to the changing physical environment companies also face a changing regulatory landscape and recent developments in the world's two most polluting countries mean this could come quicker than expected [Applause] to save our planet by getting climate under control china is the world's largest polluter but it's now vowed to go carbon neutral the world's carbon emissions have jumped in the past three decades by more than 60 percent over 70 percent of this pollution can be traced back to just 100 companies mostly through the products they sell such as oil or coal leading climate scientist gavin schmidt argues that governments will soon find there is no option but to heavily increase regulation on businesses some companies have as large a carbon footprint as some small countries right so so they have i think an equal responsibility uh to to try and do something about the problem uh you know it's it's all well and good trying to get somalia to change its its policies but it's irrelevant in terms of carbon uh but if you can get walmart to change its policies or apple or google uh then you can do something much more fundamental progress has been slow since the 2015 international paris agreement to keep global warming below 2 degrees the un climate champion responsible for working with business believes it's time to force the pace so collectively we're not moving fast enough collectively we don't have enough policy ambition um and collector we don't have enough business ambition this is going to be regulated and you can't just wait until the regulations come and then start changing it there is pressure on governments to bring in regulation of the corporate world now it's coming from consumers and climate activists and it's the focus of this extinction rebellion protest in london economic interests are prepared to sacrifice your long-term future for their short-term profit [Music] i think primarily everyone is here protesting today because there's a real sense of being let down chidi is a former banker who is now extinction rebellion spokesperson on banks and the economy it's profoundly important to bring pressure to bear on those larger players to change their practice and set a good example that everyone else can follow greenpeace are involved um friends of the earth were involved there's several parties got together to say how do we make the government actually keep to its promise yeah they declare the climate change emergency and since then nothing's happened like many extinction rebellion argues one policy is crucial forcing businesses to come clean about their levels of emissions lots of banks and lots of people want to see firms show the world they're real and full carbon footprint and trying to make that happen as quickly as possible as openly as possible is something that xr is fighting for but businesses refuse to change we will go the way of the dinosaur we will lose our habitats and potentially lose our lives in numbers and that's why groups like us are here asking government to facilitate a business environment that forces businesses to change if need be because the stakes are so high [Music] what that change will look like is an obligation for companies to measure as well as disclose their own emissions nicolette bartlett is director of an international non-profit which advises corporations on how to do this the world's worst emitting companies even the worst medium emission companies are on borrowed time carbon is very very costly to society at some point that will hit their bottom line it's guaranteed so it is a big risk if you're not seeing it measuring it reporting it and changing your business practice most businesses are not prepared for this transition only sixteen percent of listed companies currently calculate and disclose their own carbon footprint i think it's becoming harder for companies to greenwash i think more and more because of this transparency the investor world has really woken up to this the central banks have really woken up to this consumers have really worked up to us and actually joined covered even more so it's not a marginal issue anymore it's front and center it's very difficult for companies to hide but some big corporations are now jumping before they're pushed and making big decarbonizing pledges macrosoft has made a major climate pledge promising to go carbon negative amazon will be one of the first companies about the first company to meet the paris climate accords ten years early what we've seen is even in the last year a doubling of commitments from companies right and they range they they may make a claim around going to be carbon neutral or they'll make a claim around i'm going to be net zero by a certain date the task of delivering on these pledges is daunting firms will have to disclose not just the emissions they produce but also those from their supply chains which on average are over five times bigger that's a tall order for the likes of walmart it's promised to cut a billion tons of emissions between 2017 and 2030 covering 100 000 suppliers across the world its supply chain is massive it's a very bold target so the next 10 years are going to be critical i would argue that maybe now some of the the lower hanging fruit the easier stuff has been done in that supply chain it's going to take a huge effort across all of those supply chains it's absolutely critical that you are able to cover your entire value chain [Music] ultimately it's the world's most polluting companies that will be hit hardest by carbon regulation and will have to make the most drastic changes to survive in south yorkshire and britain once an industrial heartland heavy industries like coal mining have died out but at this steel plant in rotherham climate change has provided a seemingly unlikely opportunity for rejuvenation through radical green adaptation it's almost god's power in your hands right it's such an awesome feeling now they're recycling steel here according to the ceo this is half the company's emissions in britain and cut costs for the uk it's a no-brainer for the uk it is absolutely definitely cheaper to recycle steel than to make new steel uh uk exports eight nine million tons of steel scrap already and we export steel scrap and import steel which was made no sense at all so our model was based on recycling local steel scrap for the local market which was a better economic model for the long term the ceo says the company is investing in green steel which uses hydrogen to dramatically reduce emissions even though it could be two decades before this technology is commercially viable hydrogen is like renewables it's only just really starting its journey now as we make more and more hydrogen that technology will become cheaper and cheaper the same way as wind and solar technology very expensive 10 years ago and they become more and more competitive as we adopted more and more scale and as technology has developed this journey to green still is inevitable and there lies a strong incentive for businesses to adapt to climate change it could actually be good business in the long run those who invest now in expensive decarbonization may steal a march on the competition we know how industrial transformation takes place it always happens exponentially and those who get the wrong side of the curve can never catch up and we see newcomers right who who bet the farm on that transition becoming the new industrial titans this penny has dropped for some fossil fuel companies in an industry where profits could fall from 39 trillion dollars to 14 trillion by 2050 the danish company orsted has doubled its share value by completely ditching oil in favor of renewables this building that we're sitting in it's not just about the energy it's uses to keep us warm or cool how to put the lights on but it's also about the materials that made this building is it more expensive at the beginning yes but is that going to be a market for the future 100 so i would say it's logical visionary business practice but if the carrot of long-term profits doesn't incentivize companies to go green there's a stick that might force more hands in the future [Music] the growing legal risks of failing to adapt to climate change have been highlighted by one utility company in california well today pg e is expected to plead guilty to involuntary manslaughter for the utility's role in the deadly camp fire in 2019 pacific gas and electric pleaded guilty to one count of illegally starting a fire and 84 counts of involuntary manslaughter the deadliest corporate crime successfully prosecuted in america pg e power lines have helped start over 1500 wildfires in the past six years in a region where rising temperatures caused by climate change have increased the risks around fires courts have concluded the company failed to invest in maintaining their equipment and back in the wine country of napa valley local businesses have paid the price when the doors burned the wine burned behind it so i lost about almost 17 000 bottles of wine here in this tunnel here one of them is the white rock vineyard owned by christopher vandenrisch and his family this is my dad henry he's uh started this uh this version of white rock in the 70s when he replanted the vineyards this is one of the bottles that partially burned in the fires when you see that smoke coming in it's a very visceral feeling it's horrible and um traumatic in 2017 fires burned down every structure on their property i think that there needs to be a culture change at pg e in order to do a better job of maintaining the networks that they that they oversee and to reduce the profit motive the courts have ordered the company to pay out billions in compensation and pg e says it has changed his ways i do think that many people who took part in that case feel vindicated our entire business community and utilities need to learn how to adapt to a changing climate exxon mobil has long been criticized for allegedly hiding what it knew about climate change a growing number of companies are facing legal proceedings linked to global warming from allegations of misleading investors about climate risk to public nuisance claims between 2000 and 2010 about 20 climate-related cases were brought against businesses but in the past decade that figure has soared to around 120. bankruptcy negligence indictments loss of reputation all these terrible awful things are going to happen to more companies if they don't wake up and start addressing these issues [Music] lack of effective preparation for kovid 19 has contributed to devastation around the world it's highlighted the importance of acting against climate change now rather than waiting until the crisis worsens but few companies are heeding this lesson the longer we go without taking enough action and the harsher the course correction is then the bigger the stranded assets will be economically and at a human level do we manage this or do we screw it up the only choice in front of us is to lean into the the clean and the green economy not leaning in means economies that could be so severely damaged that what we see now as our global capital market would look fundamentally different this is not an issue that anybody who thinks that they're a leader can just ignore right this is a fundamental challenge for this century and anybody who thinks they can sidestep it is not really leading at all [Music] hi my name is guys griffin i'm the economist climate risk correspondent if you'd like to read my special report about business and climate change please click on the link opposite if you want to continue watching our now next series click on the other link thank you for watching and don't forget to subscribe
2021-01-15 06:01
